Despite expectations of Old Man Winter’s arrival Friday in the upper Midwest, Great Lakes and Northeast, spot prices were flat to down a few cents at most locations with even larger declines in the West where temperatures remained well above normal. The weekly gas storage report of a 1 Bcf withdrawal apparently had a little something for everyone on Thursday. It came in lower than many had expected and added a little bearish pressure to the cash market, but the withdrawal was bullish relative to the 33 Bcf injection during the same week last year, and that apparently was a factor in the 9.6 cent increase in December futures.

Meanwhile, temperatures started to fall in the Midwest and Northeast, and the cold air along with some help from rising December futures pushed Northeast cash prices higher late in the trading session but not enough to offset the weakness earlier in the day.

Weather forecasts indicate a larger blast of colder air will make its way down through the Midwest, Rockies and Pacific Northwest starting Friday. By the weekend, forecasters are expecting the Canadian air to force daytime highs down into the 40s across most of the northern two-thirds of the country, which should make bidweek buying a little more urgent.

“I haven’t really been convinced about the weather predictions for next month to say what to expect during bidweek, but I would think prices will be up somewhat,” said an Northeast LDC buyer. “There was some late buying [Thursday] that pushed prices higher at the end of the session and that could follow through into Friday because of the colder weather for tomorrow and the weekend. We’re expected to get a little snow in parts of the Northeast Saturday.”

However, he noted that many market area storage fields remain full. “It really hasn’t been cold enough yet for us to go out and even buy incremental supplies in the Northeast. We have pulled a little bit out of storage but baseload supply has been pretty much carrying us.”

Dominion South prices held up against the general down draft in the Northeast Thursday, a trader noted. “The cold front is moving in from West to East and is, therefore, hitting [Dominion’s service area] a little sooner than it is the delivered areas for Transco, Tetco and Tennessee. We expect to see those markets play catch up [Friday],” he said.

Meanwhile, western cash prices slipped Thursday with non-Bondad quotes leading the declines, tumbling about 20 cents on weak western demand and El Paso maintenance. Line 1102 between El Paso’s Plains and Eunice Stations will be down for work over the weekend, meaning there will be no gas flow between the two points. Gas from Bondad, Blanco, Anadarko and Plains will not be able to flow to the South Mainline. Permian supplies also will not be able to flow to Plains or points north.

El Paso also declared a Force Majeure event on Line 1203, which delivers gas to the Phoenix area from the North Mainline. That line will have a section out of service Nov. 22 through Dec. 1. Capacity is being cut to accommodate a road widening and power line relocation project in the City of Avondale. The outage will prevent gas from the North Mainline (San Juan gas) from reaching the southern portions of the Phoenix metropolitan area. About 70 MMcf/d of the usual 120 MMcf/d that flows south on Line 1203 will not be able to reach its market area. In addition, Williams C turbine repairs are continuing, reducing the capacity of the North Mainline by 230 MMcf/d.

To make matters worse for suppliers, there’s also no demand in the Southwest and power prices are falling. “There’s no reason for us to buy gas to generate power right now and there won’t be for some time,” said a southwestern utility buyer. He noted that on-peak Palo Verde prices were hovering around $30, off more than $4 from Wednesday.

Keystone managed to hold the smallest declines. “There’s not much of any demand in West Texas and people are selling border gas back into the Permian basin,” said a marketer. It doesn’t make sense to ship the gas to Waha either. “The only other possible explanation [for smaller declines in the Permian] is that relatively strong prices at Northern Natural Demarc are lending support to El Paso Permian. Cold air is sweeping the Midwest and there are a number of plants that connect to Northern that allow you to move gas onto the system,” he said, noting that Demarc prices traded in the low $4.10s Thursday.

California prices at PG&E Citygate and Southern California border fell a few cents Thursday but bidweek prices in the West are expected to “firm up a bit,” said one marketer. Border basis Thursday was at minus 18 for December flow. San Juan basis was minus 58-64.

Consultants at Energy Security Analysis Inc. (ESAI) warned that near-month futures could bust through prior highs and key resistance based purely on technical factors, which would pressure bidweek prices higher. However, ESAI expects fundamentals to bring prices back down at some point late in December. “Sooner or later, we expect fundamentals — high storage levels, forecasted mild winter temperatures — to overwhelm price levels,” said Scott De Pasquale, natural gas analyst at ESAI . “This pull is likely to occur toward the end of December and carry into January and February.” ESAI forecasts that prices could come off hard in the New Year, pushing well below $3.00/MMBtu by March.

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